The Co-operative Bank is putting itself up for sale

The High Street bank announced in a statement on Monday that it is commencing a sale process in a bid to build its capital base. The bank says it is also considering other options to "meet the longer term capital requirements applicable to all UK banks."

The Co-op Bank says in Monday's statement that it has made "considerable progress in delivering turnaround plan." However, it says that "Lower for longer interest rates and higher than originally anticipated transformation costs are constraining organic capital generation," and as a result is pursuing new options to raise cash, such as a sale of the business.

"The Bank has met its Pillar 1 regulatory capital requirements continuously since 2014 and expects to continue to do so. At the same time, since we began work on the Bank's turnaround, the Board has always been clear that we would need to build capital for the future. We are now commencing a sale process, alongside other options. The Bank's ethical heritage and customer proposition will be a central consideration in this."

CEO Liam Coleman says in the statement:

"Since 2013, we have successfully addressed significant legacy issues, reduced the cost base and rebuilt our franchise and customer proposition. The Co-operative Bank delivers an attractive banking proposition that is differentiated by our values and ethics and is highly valued by our 4 million customers. Customers value The Co-operative Bank and our ethical brand is a point of difference that sets us apart in the market.

"While our plan has been impacted by lower for longer interest rates, the costs associated with the sheer scale of the transformation and the legacy issues we faced in 2013, there is considerable potential to build the Bank's retail franchise further using the strength of the brand, its reputation for strong customer service and distinctive ethical position."

Bank of America Merrill Lynch and UBS are both advising the bank on the possible sale and capital raising process.

A spokesperson for the Prudential Regulation Authority, which is responsible for monitoring the financial health of banks, says in an email: "The PRA welcomes the actions announced today by the Co-operative bank. We will continue to assess the bank's progress in building greater financial resilience over the coming months."

Originally founded in 1872, the Co-op Bank has a reputation as an ethical bank, avoiding things like the arms trade, animal testing, and sweatshop labour.

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